USD Starting to Revive Again As Bond Yields Resume Upside Momentum
Trading has been sluggish during most of the day as traders didn’t have as much to work with in European morning trading, apart from the German Ifo Business Climate, although there were some good moves all around. If the BOC and FED’s Powell speech fail to get the markets going, the 5-year Treasury auction later this week might be a trigger for a market move.
The Australian dollar was the standout in the Asian session, following stronger-than-expected inflation data but then it reversed and lost more throughout the European session than it had gained during the Asian session. This comes as markets, particularly tech companies, are under pressure following mixed earnings reports from Microsoft and Google. The AUD/USD was nearing 0.6400 early, but it is currently down 0.3% on the day to 0.6330s as the USD has stabilized somewhat and is starting to come back.
USD/JPY remains just around 150.00 although the Treasury rates have started to turn bullish which is pulling the USD up with them, while EUR/USD is down 0.1% to 1.0575 from around 1.06 earlier in the day. GBP/USD is down by 0.4% at 1.2125, as the greenback maintains its gains from yesterday, despite lackluster European PMI data. Aside from that, BTC continues to consolidate gains following yesterday’s surge, remaining over $34,000 for the time being.
US bond yields continue to increase today, with the 10-year Tresy yields increasing 10 bps from around 4.81% to 4.915 as they head for 5% but near multiyear highs as investors weighed the strength of the economy. The 10-year Treasury yield increased by 2 basis points to 4.86% and the 2-year Treasury yield increased by around 4 basis points to 5.09%. Prices and yields move in opposing ways.
The 10-year Treasury yield breached the 5% threshold on Monday, reaching levels not seen in 6 years, before easing somewhat and lingering below the 5% level. But, with the conflicts around the globe and the economic uncertainties particularly in Europe, it’s likely that US bond yields keep increasing further which will keep the USD supported.
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